TaxTMI 
TaxTMI 
2021 (4) TMI 224
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....fficer has reopened the assessment under Section 147 by issuing impugned notice dated 31.03.2019 under Section 148 of the Act. 2.3 At the request of the writ applicant, reasons recorded have been furnished to the writ applicant on 17.05.2019, which reads as under : "2. In this connection, reason for re­opening of the case for A.Y. 2012­13 are as under 1. The assessee company filed its Return of Income for the A.Y. 2012­13 on 25.09.2012 declaring total income at Rs. 7,58,720/­ Assessment in the case of the assessee was completed u/s 143(3) on 31.03.2014. 2. In this case, an information has been received from O/o the DDIT(Inv.), Unit­2, Surat through email on 22.03.2019, related to inquiry report in the case of Shri Afroz Mohd. Hasanfatta and group. In this case, Enforcement Directorate (ED) received information through Customs Department Surat that some of the companies opened their bank accounts with ICICI Bank Surat and used their accounts for making foreign remittances against fake import documents. The ED conducted investigation and filed a charge sheet against some persons on 18.07.2014 and later on a supplementary chargesheet w....
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....firms and lent the same to Shri Afroze Mohd. Hasanfatta. 6. Apart from the above, many other facts have been recorded in the charge­sheets filed by the ED as well as investigation made by the Income Tax Deptt. which proved that the entire movement of funds was for the illegal purpose of money laundering. 4. In all, this money laundering scam is known as Afroze Mohd. Hasanfatta group scam. Several entities were traced related to this group on the basis funds trail, which were used as a conduit for channelizing funds to various concerns, ultimate beneficiaries of which were Hong Kong and Dubai based entities, to which the funds were transferred on the fake documents. 5. The detailed information so received from the Investigation Wing, Surat has been perused carefully and it is found that the assessee company is one of the concerns which has provided entry of funds to the below: mentioned entities operated by Shri Afroz Fatta during the F.Y. 2011­12 relevant to A.Y.2012­13: Sr.No. Parties Name Target entities Amount of transaction (in crore) 1 M/s. Nisha Diamond Pvt. Ltd M/s. Agni Gems Pvt. Ltd 10.13 Total ....
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....rculated, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidences could not be discovered by AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. Further, this case is being analysed now on the basis of fresh material which was not available with the Assessing Officer at the time of assessment. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby reopening u/s. 147 of the Act. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from Principal Commissioner of Income Tax as per the provisions of section 151 of the Act. 3. In view of the judgment of Hon'ble GHC in the case of Sahkari Khand Udhyog Mandal Ltd., it is expected from you to put your say, if any, within 60 days of receipt of this letter containing reasons of re­opening in your case. i) Once the Assess....
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....t vide order dated 30.08.2019. 3. Being aggrieved by the disposal of the objections against the notice for reopening of the assessment, the writ applicant has come up before this Court with the present writ application. 4. We have heard Mr. Sunit Shah, the learned Senior counsel assisted by Mr. Omkar C. Dave, the learned advocate appearing for the writ applicant and Mrs. Kalpana K. Raval, the learned Standing Counsel appearing for the revenue. 5. Mr. Sunit Shah, the learned Senior Counsel appearing for the writ applicant raised the following contentions: 5.1 There was full and true disclosure by the writ applicant during the course of filing of return as well as original assessment framed under Section 143(3) and therefore, there was no false or untrue declaration by the writ applicant on any of the issues on which the reopening is sought to be initiated. 5.2 It was submitted that the respondent authority failed to comply with the provisions of Section 148(2) of the Act, as before issuing the notice, the Assessing Officer should record his reasons for reopening of the assessment. Referring to the letter, the learned counsel invited the attention of this Court that no....
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....d, it has been urged that this discrepancies show that Assessing Officer has not applied his mind while forming the belief of escape assessment. 5.6 It was further contended that the Assessing Officer has acted mechanically on the basis of the information received from the concerned department and there is no any independent application of mind by the Assessing Officer to arrive at the conclusion that the income chargeable to tax has escaped assessment. Therefore, reopening based on the third party satisfaction cannot be sustained in law and the proceedings initiated on borrowed satisfaction required to be quashed and set aside. 6. In view of the aforesaid contention, the learned counsel for the writ application submitted that, the impugned notice as well as the order of disposing off the objections are bad, illegal and without jurisdiction and therefore, the same deserve to be quashed and set aside and accordingly, the writ application may be allowed. 7. On the other hand, Mrs. Kalpana K. Raval, learned Standing Counsel appearing for the revenue has vehemently opposed the writ application, contending that, in the present case, subsequent to the scrutiny assessment, the As....
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....ad filed its return of income for the assessment year 2012­13 dated 25.09.2012 declaring total income at Rs. 7,58,720/­ and assessment for the year under consideration was completed under Section 143(3) of the Act on 31.03.2014. We take the notice of the fact that the transaction of purchases with M/s. Agni Gems pvt. Ltd. amounting Rs. 4,57,48,000/­ was the reason for reopening of the assessment for the year under consideration. 12. A plain reading of the reasons recorded as indicated above, emerge that the Assessing Officer had received inquiry report in relation to Mr. Afroze Mohd. Hasanfatta and Mr. Madan Jain, who made foreign remittances through 12 different companies, controlled and supervised by them and there involvement in money laundering was detected. As per the report, out of 12 companies, one of the concerned was M/s. Agni Gems Pvt. Ltd., who made transactions either directly or in circular manner, without any import from the other countries and money circulated outside India. The Assessing Officer noticed that the crores of rupees were remitted in UAE and Hongkong on the basis of forged bill of entry through the bank accounts of 12 companies. The Assess....
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....he made independent inquiries and applied his mind and upon due satisfaction, he formed an opinion that, the income has escaped assessment. 16. The main contention advanced by the learned counsel that at the final assessment proceedings, all the material facts including the transactions with M/s. Agni Pvt. Ltd having been duly recorded in the books of accounts and same was thoroughly examined by the Assessing Officer and in this circumstances, when there was no concealment or suppression of any facts, the reopening beyond 4 years in the absence of any non­disclosure of material facts cannot be permitted. 17. We do not agree with the above contention mainly on the ground that during the course of previous assessment proceedings, the assessee failed to disclose material particulars with regard to alleged transactions and the true facts of the transactions having been discovered by the Assessing Officer on the basis of the information received from the concerned department. Law in this regard has been settled by various decisions of this Court as well as the Apex Court that burden is on the assessee to make true and full disclosure. Therefore, where the transaction itself on....
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.... (P) Ltd Vs. DCIT, (2018) 91 taxmann.com 119, this Court held that where reassessment proceedings were initiated on the basis of the information received from the investigation wing that assessee had received certain amount from the Shell Companies working as an accommodation entry provider merely because these transactions were scrutinized by the Assessing officer during original assessment proceedings, the reassessment could not be held unjustified. 20. In Aaspas Multimedia Ltd. VS DCIT (2017) 78 taxmann.com, this Court while examining the validity of the notice, held that where assessment was made on the basis of information received from the Principal DIT, (Investigation), that assessee was beneficiary of accommodation entry by way of share application provided by a third party, same was justified. 21. In the case of Jayant Security Finance Ltd Vs. Asst. CIT (2018) 91, taxmann.com, this Court held that the information from the investigation wing stating that the loan from the company working as an entry operator and earning bogus firms to provide advances to various persons was sufficient and would constitute genuine and bonafide reason to believe. 22. In view of the l....
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....sessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re­opening could not and should not have been declared as invalid, on the ground that he proceeded on the show­cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. 10. In case of Central Provinces Manganese Ore Co. Ltd. v. Income Tax Officer, Nagpur (supra) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically undervoicing the value of Manganese as compared with the prevailing ....
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....e Act and that he did not have conducted any inquiry or investigation into the information sent by Shri. Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri. Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri. Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to c....
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....ssessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under: "23 The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs. 27 lakhs mentioned in the table in Annexure P­2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific informati....